Monday, February 6, 2017

Retirement Balances at Fidelity Hit Record Levels

On February 2, 2017 Fidelity released its retirement savings balance information for the fourth quarter of 2016. Fidelity shared the following (please read the press release for more information):

"Key to a successful retirement strategy is having a solid contribution rate and not tapping your 401(k) for short-term expenses," said Kevin Barry, president, Workplace Investing, Fidelity Investments. "More than one-in-four Fidelity 401(k) savers increased their savings rate in 2016—an all-time high, and the number of people with a 401(k) loan dropped to its lowest point in seven years. This shows people are taking the right steps towards reaching their retirement savings goals and illustrates how the 401(k) is helping millions of people prepare for retirement."

Fidelity reveals savers have a record average 401(k) balance. Fidelity attributes the higher balances to increasing contributions and stock market performance taking the average 401(k) balance to an all-time high of $92,500 at the end of Q4, topping the previous high of $92,100 in Q1 2015 and an increase of $4,300 from a year ago. This is how the average 401(k) and average IRA have changed over the last five years:

To put these numbers in context, Vanguard released their How America Saves report in June of 2016. In it they state:

In 2015, the average account balance for Vanguard participants was $96,288; the median balance was $26,405.

Even though Americans still aren't saving enough for retirement, these are positive trends and hopefully show that the changes made in the Pension Protection Act of 2006 are starting to have a positive impact on Americans' retirement savings.